Statute Of Limitations And Bad Faith Insurance

Insurance lawyers know there are time limits upon which lawsuits for bad faith insurance claims must be filed.

These limitations are illustrated in the 2018, U.S. Fifth circuit Court of Appeals opinion styled, Susan Sideman; Mark Sideman v. Farmers Group, Incorporated.

The Sidemans sued Farmers for breach of the Texas Insurance Code, Section 541.  In June 2013, Farmers mailed the Sidemans an offer package including (1) notice that Farmers was  not renewing the policy; (2) an offer for a new policy; (3) a summary comparison of the old policy and the new policy; and (4) a new endorsement, prominently titled “Exclusion of Marring of Metal Roof Materials” that limited coverage to situations where a covered peril such as hail punctures a roof or renders it functionless, and explicitly excluded coverage for mere marring like denting or scratching.

Nearly three years passed.  In April 2016, a hail storm cosmetically damaged the Sideman’s metal roof.  They filed a claim but were told that cosmetic hail damage was not covered.  Upset, the Sideman’s sued under Section 541, alleging several items from the offer package were misleading or false.  Specifically, they claim the package’s summary comparison and marring exclusion was misleading and that a full copy of the new policy was not included in the package.

Farmers moved for a Rule 12(c) judgment on the pleadings.  The trial court granted the motion because the claims were timed barred.  This Court affirms the Judgment.

The Sideman’s claims, whatever their merit are time-barred.  The applicable statute of limitations in found in Texas Insurance Code, Section 541.162(a).

The Sideman’s claims are based upon the packet received in June 2013.  But they did not sue until January 2017.  This is well past the two year statute of limitations.

The Sideman’s argued the discovery rule.  The Court disagreed with this argument pointing out that the Sideman’s should have noticed and discovered the things they now argue they did not notice and discover.